Government aims for £100m e-procurement savings

An ambitious central government electronic marketplace codenamed 'Project Zanzibar' could save the public sector £100m over three years.

The project, named after the world's oldest marketplace, is due to go out to tender in the summer and has a tentative launch date of March 2005.

It is being headed up by the Office of Government Commerce (OGC), with the system set to be available initially to 78 central government departments and agencies, with the possibility of a wider public-sector rollout if it is successful.

An OGC document describes Zanzibar as a 'purchase-to-pay' marketplace, electronic hub and data warehouse that will provide a single point of access to the government marketplace for both buyers and suppliers.

Getting suppliers engaged in electronic marketplaces, which have often been seen purely as a means for buyers to drive down prices, has been an issue due to which many of these projects in the private sector have failed in the past.

The OGC recognises this and said in the document: "Successful supplier adoption is crucial to the success of any marketplace. The major risk to the achievement of these benefits is lack of take-up by users (buyers and suppliers)."

The XML-based hub will be accessible through the e-procurement module of an ERP system or via a web browser, in an effort to make it easier for suppliers to connect and use the system.

The proliferation of XML standards was an issue in a series of e-procurement pilots last year but the OGC is expected to publish a document next week laying down standards for the public sector.

No cost has yet been put on the project but savings have been calculated at £6.7m in the first year, £29m in the second year and £72.5m in the third year.

The initiative will not be overseen by the current head of the OGC, Sir Peter Gershon, whose replacement was officially announced by the government yesterday. Gershon's contract expires at the end of March and he indicated last year that he would not continue in his present role. He will be succeeded by his deputy John Oughton on 1 April.